ETF Spotlight on PIMCO Intermediate Municipal Bond Strategy Fund (NYSEArca: MUNI), part of a weekly series.
Assets: $32.9 million
Objective: MUNI is an actively managed bond ETF. John Cummings, the executive vice president of the municipal bond desk at PIMCO, manages the fund.
Holdings: Muni consists of a portfolio of 86 municipal bonds that are primarily of intermediate duration, high credit quality and which carry income that’s exempt from federal taxes.
What You Should Know
- Actively managed bond funds have a great benefit over indexed bond funds in that they can adjust according to shifting credit conditions. This is going to be an important factor when the Fed raises interest rates, which many anticipate will happen later this year.
- MUNI has an expense ratio of 0.35%
- MUNI’s 30-day SEC yield is 2.1%; the yield to maturity is 2.9%
The Latest News
- Municipal bonds are highly appealing right now; interest is exempt from federal taxes, and in some cases, state and local taxes as well.
- Muni bonds are generally safer than U.S. Treasuries but riskier than corporate bonds.
- Defaults are rare; localities and states generally have resources at their disposal to raise cash before resorting to defaulting on debt.
- Muni bonds are one of the few tax shelters for high net-worth investors, so they’ve become especially appealing in recent years.